Enabling Private Ordering - the University of Minnesota Law School

2009] UMBRELLA CLAUSES 67
case, the State would clearly not be bound by the contractual
forum selection in the investor-State relation, because the
investor does not dispose of the power to restrict its home State
concerning the arbitration mechanism under an international
treaty. In addition, the dispute settlement mechanism under a
BIT cannot be overridden or dispensed with under a forum
selection clause, because this would effectively contain a
prospective waiver of the right offered to a foreign investor in an
international treaty to have recourse to a treaty-based
tribunal. 179 If one perceives investment treaty arbitration as
private enforcement of public international law, there is no
reason why the investor should be treated less favorably than
its home State in terms of access to arbitration under the treatybased
forum.
Furthermore, the view that the investor-State obligation
under the umbrella clause has only been breached after the
contractual forum has been seized can be countered by the
concept of the severability of the contract’s arbitration clause
and the substantive obligations stipulated in the treaty. The
concept of severability views contractual arbitration clauses as
an agreement between the parties that is independent from the
substantive obligations. This concept is not only uniformly
accepted in commercial arbitration, 180 but also in various cases
under international law. 181 Similarly, Art. 25 of the ICSID
Convention supports the independence of the consent to
arbitration from the underlying substantive obligations between
178. On the question of whether an investor can waive the rights granted under
an international investment treaty, see Schöbener & Markert, supra note 114, at 96
et seq. (declining this possibility because the investor does not have the power to
dispose over rights and obligations under international law and would thus violate
interests his home State may have in enforcing the substantive obligations under
the BIT). See also Wälde, “Umbrella Clause” in Investment Arbitrations, supra note
4, at 211, 232 (with further references). But see Ole Spiermann, Individual Rights,
State Interests and the Power to Waive ICSID Jurisdiction, 20 ARB. INT’L 179, 210
(2004).
180. See, e.g., GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION:
COMMENTARY AND MATERIALS 55-74 (2d ed. 2001) (with further references).
181. See Plama Consortium Ltd. v Bulgaria, ICSID Case No. ARB/03/24,
Decision on Jurisdiction, para. 212 (Feb. 8, 2005); Stran Greek Refineries and
Stratis Andreadis v. Greece, Judgment of Dec. 9, 1994, Ser. A - 301-B, 65, para. 72;
Texaco Overseas Petroleum Company and California Asiatic Oil Company v.
Government of the Arab Republic of Libya, 1975, 53 I.L.R. 389, 393 (R.J. Dupuy,
Sole Arb. 1979) (Preliminary Decision of Nov. 27); The Losinger & Co. Case, Decision
of Oct. 11, 1935, P.C.I.J. Reports (Ser. C) No. 78, p. 110; Lena Goldfields Company
Ltd v. Soviet Government, 5. Ann. Dig. & Rep. Pub. Int’l L. Cases (1929-1930) (case
no. 258).